The Canadian government has planted a flag by committing to legislation that will regulate stablecoins backed by its dollar, following the recent footsteps of its American neighbors who passed a new law to regulate stablecoin issuers there over the summer.
With the release of Budget 2025 on Tuesday, the government said it is focused on setting clear standards for 1-1 reserves, and will put management of the effort in the hands of the Bank of Canada. “This legislation will require issuers to maintain and manage adequate asset reserves, establish redemption policies, implement risk management frameworks and protect Canadians’ sensitive and personal information,” according to the budget document that emerged this week.
Following in the footsteps of the new American law known as the Guidance and Establishment of National Innovation for US Stablecoins (GENIUS) Act, the Canadian development was met with praise from cryptocurrency advocates there.
The Canadian Web3 Council said it is “encouraged by the government’s commitment to allowing innovators to issue stablecoins, which will encourage competition in Canada’s payments market and reduce transaction costs for consumers and businesses.”
The budget indicated that the government will have to make amendments to the Retail Payment Activities Act. He also called for “national security safeguards” to ensure the security of the Canadian financial system.
“Canada has fallen behind the global standard for this innovative technology and this is an excellent step forward by [Minister of National Revenue] François-Philippe Champagne and [Prime Minister] Mark Carney to increase innovation in the financial sector,” said Didier Lavallée, CEO of Tetra Digital Group, which bills itself as Canada’s first fully regulated digital asset custodian and financial services provider. He added that the approach “sends a strong signal that stablecoins should be regulated as payment instruments and not securities.”
Once the commitment is made, the focus will be on how it is being implemented.
“It’s great to see real progress,” said Eric Richmond, general counsel at Shakepay, in a post on the social media site LinkedIn. “The focus now turns to implementation: ensuring the framework remains open, proportionate and accessible, so that fintechs can help build the next generation of trusted payment avenues for Canadians.”
Read more: Tetra Digital raises $10 million to create Canadian dollar-regulated stablecoin
